SBA Policy Notice 5000-879058: Coordination of 7(a) and 504 for Maximum Loan Limits
Summary
SBA Policy Notice, Control No. 5000-879058, published May 18, 2026 and effective July 4, 2026, to SBA employees, 7(a) lenders and certified development companies, on coordination of 7(a) and 504 for maximum loan limits. It advises that SBA is clarifying in policy that a borrower's outstanding loan balance under the 7(a) loan program, up to and including the maximum loan limit, does not reduce the maximum loan amount available under the 504 program. The notice sets out related clarifications.
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SBA Policy Notice
TO: All SBA Employees, 7(a) Lenders and CONTROL NO.: 5000-879058
Certified Development Companies
EFFECTIVE: July 4, 2026
SUBJECT: Coordination of 7(a) and 504 for
Maximum Loan Limits PUBLICATION: May 18, 2026
The purpose of this notice is to advise SBA employees, 7(a) Lenders, and Certified Development
Companies (CDCs) that SBA is clarifying in policy that: (1) a borrower's outstanding loan
balance under the 7(a) loan program, up to an including the maximum loan limit, does not reduce
the maximum loan amount available under the 504 loan program, except as specifically provided
in this Notice; and (2) a 504 Project may include multiple assets that are eligible be financed
simultaneously.
Background
The 7(a) loan program is authorized under Section 7(a) of the Small Business Act (15 U.S.C.
§ 636(a)), and the 504 loan program is authorized under Title V of the Small Business
Investment Act of 1958 (15 U.S.C. § 696). The maximum loan amount for the 7(a) program is
established at 15 U.S.C. § 636(a)(3)(A): the gross loan amount for any individual 7(a) loan may
not exceed $5,000,000, and the total outstanding SBA-guaranteed balance across all SBA loan
programs to a single borrower (including affiliates) may not exceed $3,750,000, or $4,500,000 if
it is a qualifying export loan. The maximum loan amount for the 504 program, however, is
established separately at 15 U.S.C. § 696(2)(A)(i): the aggregate outstanding SBA debenture
balance for a single borrower (including affiliates) may not exceed $5,000,000 for standard
projects, or $5,500,000 for projects of small manufacturers or qualifying energy and renewable
fuels projects.
To reduce or eliminate any programmatic barriers restricting or limiting access to SBA lending
programs, SBA is recognizing the statutorily established independent limit of the 504 loan
program, thereby allowing lenders to issue both 7(a) and 504 loans sequentially.
SBA has determined that further clarification is warranted to ensure that SBA employees,
lenders, and CDCs apply these limits correctly and consistently—specifically, that a lender may
first approve a 7(a) loan followed with a 504 transaction approved by the CDC second. By
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sequencing loans, a small business concern can, for example, use the 7(a) program to fund their
working capital and light equipment while also using the 504 program to finance their facility.
To implement this clarification, SBA is revising Section C, Chapter 1, Paragraph D, “504
Debenture Terms and Conditions” (Page 351) to read as follows:
“D. 504 Loan and Debenture Terms and Conditions
The terms of the Third Party Loan are defined in 13 CFR § 120.921. Also see Paragraph B,
Third Party Lender Participation of this Chapter.
1. Debenture Limits (Minimum and Maximum)
13 CFR §§ 120.930 and 120.931
Net Debenture Proceeds is defined in 13 CFR § 120.802 as the portion of Debenture
proceeds that finance eligible Project costs (excluding administrative costs). The Gross
Debenture is the Net Debenture Proceeds plus the eligible administrative costs. The
Gross Debenture is subject to the following dollar limits and conditions:
a. The minimum dollar amount for a debenture is $25,000. 13 CFR § 120.930(b)
b. For all 504 Projects, the gross debenture is limited to an outstanding maximum
balance of $5,000,000 in the aggregate for each small business concern, including
its affiliates, except for Eligible Energy Public Policy Projects and Projects for
Small Manufacturers in c. and d. below. SBA considers an EPC and an OC to be
“one business” for this purpose. To calculate this limit include only all SBA 504
loans, committed or outstanding, that the Applicant and its affiliates have
received.
c. Eligible Energy Public Policy Projects
$5,500,000 maximum for each eligible project. However, the total outstanding
Gross Debentures issued for a small business concern, including affiliates, for
Eligible Energy Public Policy Projects must not exceed $16,500,000 in the
aggregate. Loans made for Eligible Energy Public Policy Projects do not reduce
the $5,000,000 limit for each small business concern for other 504 Projects.
Eligible Energy Public Policy Projects include:
i. Paragraph A.2.a.i. of this Chapter: Projects for the reduction of existing
energy consumption by at least 10%, and
ii. Paragraph A.2.a.ii of this Chapter: Renewable energy sources that
generate more than 15% of energy used at Project Facility.
d. Projects for Small Manufacturers
$5,500,000 maximum for each eligible project, defined as a business with its
primary NAICS Code in Sectors 31, 32, and 33, and all of its production facilities
are located in the United States.”
Additionally, SBA is further clarifying that a 504 Project may include multiple assets that are
eligible to be financed simultaneously, subject to 504 Debenture limits. This change is especially
impactful for Small Manufacturers who may be purchasing a facility and a production line
simultaneously and require independent financing for both assets.
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To implement this clarification, SBA is revising Appendix 3: Definitions (Page 409):
“Project: (13 CFR § 120.802 504) The purchase or lease, and/or improvement or renovation
of one or more long-term fixed assets by a small business, with 504 financing, for use in its
business operations. Borrowers may finance multiple Projects simultaneously using separate
504 loans, subject to 504 Debenture limits. Note: This SOP uses the term Project for 7(a) also.
Project Property: (13 CFR § 120.802 504) One or more long-term fixed assets, such as land,
buildings, machinery, and equipment, that are acquired or improved by a small business with
a 504 transaction and for use in its business operations.”
Questions
7(a) Lenders can submit questions regarding this Policy Notice 7aQuestions@sba.gov. CDCs
and Third Party Lenders can submit their questions to 504Questions@sba.gov.
Kelly Loeffler
Administrator
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